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Posted Nov 16, 2007, 11:58 PM
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BANNED
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Join Date: Jun 2006
Location: San Francisco & Tucson
Posts: 24,088
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Trump Condo Projects in trouble around N. America
Quote:
Stalled Condo Projects Tarnish Trump's Name
Buyers Lambaste Developer, Whose Coffers Seem Secure
By ALEX FRANGOS
November 16, 2007; Page B1
Even the Trump name isn't bigger than the calamitous condo market.
Donald Trump's reputation as a real-estate developer could take a hit as some condominium projects emblazoned with his famous name run into trouble.
In recent years, Mr. Trump has lent his name, and in some cases his own money, to at least 20 projects in the U.S. and another half dozen abroad, including buildings in Dubai of the United Arab Emirates and Seoul, South Korea. While in some cities such projects are doing fine, others face slow sales, project delays and cancellations -- and irate buyers.
In Tampa, Fla., buyers who placed deposits of $200,000 to $1.2 million on units in the 52-story Trump Tower Tampa are fuming. Nearly three years after the $260 million skyscraper was started, construction has stopped.
Meantime, a Fort Lauderdale, Fla., tower with Mr. Trump's name on it was put on hold indefinitely last month, and a West Palm Beach project could be put on the shelf shortly. Construction on a Trump Tower in Toronto is just getting under way after years of delays and a reduction in height. And at Trump Tower Chicago, a hotel and condo project set to be the second tallest building in the city after the Sears Tower, 30% of the 825 units remain unsold as the condo market there slows.
Mr. Trump is known for focusing on the positive. "All of my stuff has been a great success," he said in an interview Wednesday. "Nobody has even come close to the track record that I have." He points to many other projects he is involved in that he considers outsized successes, including ones in Las Vegas, Hollywood, Fla., Miami, New York, Hawaii and the Dominican Republic. "Somebody says 'how's the market?' I say not good except for Trump," he says.
Artist rendering of the finished Trump Tower Tampa
But the recent problems at developments bearing his name are evidence that no one is immune from the downdraft in the housing market. New housing projects throughout the country are suffering from weak demand and falling prices as banks tighten credit standards and a glut of empty units swells.
This time around, Mr. Trump personally is in little danger financially. During the last real-estate collapse in the early 1990s, he was pushed to the brink of bankruptcy because he was personally on the hook for hundreds of millions of dollars worth of debt. He later restructured his debt with the banks and worked his way back to doing real-estate deals.
In some recent condo projects, Mr. Trump has sold his name to developers for a fee and, in certain cases, he gets a portion of the sales in the building as well. In some he has contributed a minority slice of equity. This means, even if the projects fail, his financial exposure is limited, although his reputation may suffer. In other projects, such as in Chicago and Las Vegas, he says he is the lead investor.
At Trump Tower Tampa, which began its marketing in 2005, sales initially soared. The local development company, SimDag LLC, sold all 192 units and then, as the market skyrocketed, returned buyers' deposits, raised the units' prices and sold out again.
Then in August 2006, a city inspector examining a key part of the foundation known as the caissons discovered the plot of land wasn't solid enough to support design. Construction never resumed.
Elaine Lucadano (with family) is among the angry buyers in the stalled Trump Tower Tampa
In May, Mr. Trump sued SimDag in federal court in Tampa, charging the developer with failing to pay him much of his licensing fee and failing to execute on construction and sales milestones promised in the contract. Court documents filed by Mr. Trump's lawyers say his involvement was limited to licensing his name to the developer for $4 million plus a cut of the sales.
But many of the buyers feel that they were led to believe that he had a much larger stake. "The only reason we bought into this was because of Trump," says Don Wallace, a local restaurant owner whose wife, Elaine Lucadano, has interests in two units. "He's bashing Rosie O'Donnell, and we're twisting in the wind," referring to Mr. Trump's tabloid spat with the talk-show host. Jugal and Maju Teneja, who paid $528,000 to reserve a unit in October, filed a suit against Mr. Trump and SimDag in Hillsborough County Circuit Court, claiming they deceived buyers into thinking Mr. Trump was closely involved in the development of the tower.
Mr. Trump says his role as a licensor was disclosed in offering documents given to buyers, a point Mr. Wallace disputes. Mr. Trump also noted that his ability to deal with construction problems has been limited. "When I license my name to somebody, I don't have the same power over a job," he says. "I could have pulled the Tampa job off easily. Other people can't pull it off easily." Now, Mr. Trump says, the Tampa project has become a victim of the deteriorating financing and sales climate. "If there was a job today that was going to start...I would most likely say let's wait a little while," he says.
Overall, though, he says his projects are successful, even in markets that are suffering problems, noting his name indeed sells units. "How many times is Trump supposed to be selling out a building before they move forward?," Mr. Trump asks. As for his brand image, he says: "Tampa doesn't hurt me."
SimDag pins the delays on construction problems. "This wasn't a story about a bad market. It's a story about bad soil," says David Hooks, a spokesman for SimDag. The developer says it is now being held up by a delay in obtaining construction financing and that the company is close to getting financing from a hedge fund it declined to identify.
The Trump name has driven the success of numerous condo projects. Mr. Trump says six months ago he received nonrefundable deposits for every unit on a project in Honolulu in one day. His says his interest in the project goes beyond licensing his name, but declined to give details. A condo-hotel tower in New York's Soho that he is affiliated with has 4,500 inquiries of interest for 450 slots, though they aren't for sale yet, he says.
But not all of Mr. Trump's ventures have been runaway successes. His casino company was forced to seek bankruptcy-court protection in 2004. It emerged in 2005 as Trump Entertainment Resorts Inc., but has since struggled.
In the condo market, some of Mr. Trump's projects may be suffering in part from brand dilution. One person familiar with the Fort Lauderdale project Trump Las Olas said it was shelved partly because Mr. Trump has lent his name to two other projects nearby.
Mr. Trump denies there was any brand dilution, though he says Trump Las Olas didn't make it because it "can't compete with the Graves site," a hotel and tower project that also bears his name in Fort Lauderdale, designed by architect Michael Graves. "Frankly, it's a better site...It's a more impressive building," Mr. Trump says.
Mr. Trump's delayed condo-hotel project in Toronto fell behind a competing Ritz-Carlton, and the building now going up has 13 stories fewer than originally planned. However, Mr. Trump says the project is in good shape.
In Atlanta, two condo towers with the Trump name are about to be launched at a time when 5.8% of the homes there are for sale, the second-highest inventory of unsold homes in the country, according to Zelman & Associates, a housing-research firm.
Mr. Trump says Atlanta is "a beautiful job going well." Asked about Atlanta's poor housing market, Mr. Trump said, "You know I can't be everywhere. It's like somebody says, 'why didn't you build here or there?' Who's done better deals than me?"
Write to Alex Frangos at alex.frangos@wsj.com4
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Source: http://online.wsj.com/article/SB119517867398895020.html
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